Filing of Form No BEN-2 By Company to ROC to Declare Significant Business Owner (SBO)
Overview : This is going to be a mega exercise by the Ministry of Corporate Affairs to identify the Key owners of a company in view of the amendments made on 8th February 2019 to the Companies (Significant Beneficial Owners) Rules, 2018. The new law not only provides clearer definitions for determination of individuals or entity as the Significant Business Owner of a company but also lays down detailed and elaborate procedure for seeking a declaration from the SBO and to file a Return in Form BEN-2 to the ROC.
The disclosures to be made by the individuals or entities holding 10% or more shares or voting power in any company is very comprehensive in nature and encompasses holdings not only in a company but also in any other entity such as LLP, any other body corporate, HUF, Partnership Firm, Discretionary Trust, Charitable Trust, Revocable trust, Pooled Investment Vehicle (PIV), or any entity controlled by such PIV. The expectations are very high from this new legal reporting and are expected to bring transparency in the shareholding structure of a company and would help the government agencies to identify and prevent the Benami and Money Laundering activities. In case there is a default on the part of the SBO, wherein they are not providing the response or in case the response is inappropriate then the company concerned can approach NCLT for suitable directions, including the freezing of their rights in the company.
The ministry of corporate affairs amended the Companies (Significant Beneficial Owners) Rules, 2018 which has come in to effect from its date of publication in The Gazette of India on 8th February 2019. This very amendment has introduced a structured and detailed procedural framework, new reporting requirement for every company registered in India under the Companies Act, 2013 or any previous law.
In brief, every company has to identify persons holding more than 10% of shares or voting right in the company and obtain a declaration from them in Form Number BEN-1. These persons shall be known as Significant Business Owner. For the purpose of soliciting the declaration in form BEN-1, the company shall send a letter in Form Number BEN-4 to every Significant Business Owner of the company annexing a blank declaration form (BEN-1). The shareholder is obligated to return the declaration within 90 days of the applicability of this rule and in case of failure, the company should move an application before NCLT for appropriate action against the rights of the SBO.
Within 30 Days of declaration from the persons of Significant Business Owners, the Company has to file a Return to the ROC in the form Number BEN-2 through any of the duly authorised director, Manager, CEO or CFO or Company Secretary of the Company. The form BEN-2 is also required to be further certified by a practising professional who may be a Chartered Accountant, Company Secretary or a Cost Accountant in whole time practice.
Following are the activities which have to be performed by every company in order of preference, with their due dates.
Directors may find themselves in situations where surrendering or canceling their Director Identification Number (DIN) becomes necessary. These actions are typically prompted by various circumstances, each carrying its implications for both the director and the company. Here are the common reasons why directors may choose to surrender or have their DIN canceled. Understanding these reasons will further enlighten you on the procedural formalities required for the same.
| S.No. | Activity | Time Line |
|---|---|---|
| 1. | Identification of Significant Business Owner (SBO) | Immediately |
| 2. | Creation and Maintainance of Register of Beneficial Owners holding Significant Beneficial Interest in Form No – BEN-3 | Immediately |
| 3. | Intimation to every SBO in Form No BEN-4 | Immediately |
| 4. | Filing of Return to the Registrar of Companies in Respect of declaration under Section 90 in Form Number BEN-2 | Within 30 Days of receipt of a declaration from SBO |
FAQ’s
The e-form BEN-2 is the prescribed form released by the Ministry of Corporate Affairs vide notification dated 8th February 2019, wherein every company has to file a return to the ROC for the following purposes:
- For declaration of significant beneficial ownership under section 90
- For change in significant beneficial ownership
- For declaration of holding reporting company
The return in e-form BEN-2 is a declaration by a company about individuals or entities holding 10% or more shares or voting rights. It must be filed within 30 days of receiving the declaration from the SBO. The SBO must file their declaration for the first time within 90 days from 8th February 2019.
Yes, the government fee for filing BEN-2 depends on the authorised capital of the company:
| S.No. | Authorised Capital (INR) | Fee (INR) |
|---|---|---|
| 1. | Less than 1,00,000 | 200 |
| 2. | 1,00,000 to 4,99,999 | 300 |
| 3. | 5,00,000 to 24,99,999 | 400 |
| 4. | 25,00,000 to 99,99,999 | 500 |
| 5. | 1,00,00,000 or more | 600 |
Yes. If a company does not file the BEN-2 form within the stipulated 30 days, it can still file later with an additional government fee for delay as per MCA rules.
Additional Fee as per Rule:
| S.No. | Delay | Additional Fee (Times of Normal Fee) |
|---|---|---|
| 1 | Up to 30 Days | 2 Times |
| 2 | 31–60 Days | 4 Times |
| 3 | 61–90 Days | 6 Times |
| 4 | 91–180 Days | 10 Times |
| 5 | More than 180 Days | 12 Times |
The only attachment required to be annexed with the BEN-2 form is the declaration in Form BEN-1 from each shareholder holding 10% or more shares or voting rights.
An SBO (Significant Beneficial Owner) is a person who holds any of the following in a company:
- 10% holding of shares, or
- 10% voting rights (directly or indirectly), or
- Right to receive 10% or more of the total dividend (directly or indirectly), or
- Has significant influence or control.
- Authority constituted under Section 125(5) by the Central Government
- Holding reporting company (details of such company to be reported in BEN-2)
- Central Government, State Government, or Local Government
- Entities controlled by Central, State, or Local Governments
- Regulatory authorities such as SEBI and RBI
Author Bio
